Menu

REAL ESTATE

10 Home Renovations That Offer the Best (and Worst) Return on Investment

This was posted in Realtor.com–not sure I agree with some of these….what do you think?

/iStock.com

Remodeling may be a labor of love, but it’s also an investment that can seriously boost the value of your home. Only by how much? Well, according to Remodeling magazine’s 2016 Cost vs. Value Report, you’ll recoup an average of 64% of what you paid for a renovation if you sell your home this year.

To arrive at these figures, Remodeling asked consultants in various markets to estimate the average cost for 30 home improvement projects, from adding a bathroom to replacing a roof. Then, they asked real estate agents nationwide to estimate the expected resale value of these renovations so that readers could compare their out-of-pocket costs to how much money they’d get back when it came time to sell their home.

So, what projects gets you the most bang for your home renovation buck? It may not be nearly as sexy (or fun!) as adding a chef’s kitchen or glam bathroom, but attic insulation gets the top spot. That’s right: Stuff some fiberglass insulation into the walls of a 35-by-30-foot attic, and you’ll pay an average of $1,268. But when you sell, you will rake in $116.90 for every $100. For you math-challenged out there, that’s a recoup of 116.9% of your costs. It’s the only home reno on this year’s report that redeems more money than you spend!

The next best-paying renovation on the list: manufactured stone veneer, offering a respectable 92.9% return.Meanwhile—sorry, luxury tub fans—the home improvement project that reaps the worst ROI is the addition of a bathroom, at 56.2% (although the “added value” of an extra bathroom for anyone who’s ever had to wait their turn for one is, of course, priceless).

Take-home lesson? If you’re looking for a general rule of thumb, it’s that less is more: Lower-cost projects generally reap bigger returns, with four of the five projects that cost less than $5,000 ranking among the top five for money back when you sell.

Check out the best (and worst) returns for home renovations in the two charts below, including how much you’ll pay and get back if you sell your home this year.

There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage – either your mortgage or your landlord’s. As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Also, if you purchase with a 30-year fixed rate mortgage, your ‘housing expense’ is locked in over the thirty years for the most part. If you rent, the one guarantee you will have is that your rent will increase over that same thirty year time period.

As an owner, the mortgage payment is a ‘forced savings’ which will allow you to have equity in your home you can tap into later in your life. As a renter, you guarantee the landlord is the person with that equity.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting since home values and interest rates are still at bargain prices.

There are some homeowners that have been waiting for months to get a price they hoped for when they originally listed their house for sale. The only thing they might want to consider is… If it hasn’t sold yet this fall, maybe it’s not priced properly.

After all 14,164 houses sold yesterday, 14,164 will sell today and 14,164 will sell tomorrow.

Outdoors Are In

From the pages of RESIDE® | Luxury Homes and Lifestyles Around the World | Fall 2014 Master Edition

Out is the new in. Plush sofas, area rugs, stone fireplaces–for the past several years, traditional furnishings and design elements that were once relegated exclusively to interiors have been trickling to exteriors, with homeowners creating exquisite residential spaces under the skies for relaxation and entertaining.

And it’s not only the living room that has gone rogue. The solitary, standard patio barbeque grill has been replaced with sophisticated, gourmet kitchens complete with pizza ovens, flat screen TVs and built-in espresso machines. After cooking alfresco, homeowners wine and dine with family and friends under the stars and glittery chandeliers, followed by open-air movies or sports on pop-up screens.

Nowadays “people don’t want to be confined to inside anymore,” says Suzanne Perkins of Sotheby’s International Realty in Montecito, CA. They want the option to literally spread out—and to interact with nature with the same comfort and style that they enjoy indoors.

Indeed, when pros specializing in residential design were surveyed by the American Society of Landscape Architects to rate the popularity of outdoor design elements for 2014, kitchens and entertainment spaces were second most popular, at 92 percent (gardens and landscaped spaces came in first at 94.2 percent).

Of course, in certain parts, this indoor/outdoor approach to living isn’t new at all. “This has been the lifestyle in Hawaii,” says Dodie MacArthur of MacArthur Sotheby’s International Realty in Kailua-Kona, Hawaii. “Whatever activities you can do indoors you can do outdoors.”

Surprisingly, that’s also now the mindset in areas that aren’t particularly warm year-round. “Outdoor living is a really big trend here over the last couple of years,” says Andrew Ernemann, a broker associate at Aspen Snowmass Sotheby’s International Realty. Although they have a short warm weather season, Ernemann’s clients want to maximize their time outdoors when they stay in Aspen.

But the trend isn’t just about stepping out and reclining on a deck or patio. It’s far grander than that. “It’s about creating a personal destination. People want the entire experience of the best resorts in the world, incorporated into their outdoor spaces and customized for their needs,” says MacArthur.

One of the best ways to achieve a seamless, organic flow with an open floor plan is by utilizing floor to ceiling sliding or swinging glass doors, suggests Perkins, “so the outside isn’t a secondary defined area, but more of a smooth transition from inside to outside.”

When considering the creation of outdoor living spaces such as a dining room, living room and kitchen, do work with a landscape architect and/or interior designer with experience in indoor/outdoor living. And Brooklyn-based designer Lyani Powers says that a good approach is to plan the entire project at once, taking into account basic necessities such as plumbing, heat and electricity, audio and visual equipment and wireless/internet connectivity. There may also be structural additions, such as pergolas, loggias or lanais, for shade and protection.

There are outdoor living solutions for all types of climates, even rain and cold. “Open but covered is the way to go,” says Krista Hunter of Hunter Sotheby’s International Realty in Thailand. “Otherwise you run the risk of not being able to use your outdoor space for much of the time.” In Aspen, some homeowners add roofs over their outdoor living rooms so they can still be utilized in the winter.

Most outdoor areas typically feature recreational zones, which can include a hot tub and swimming pool. But consider adding wow factors to enhance the outdoor experience: a pool table, a life-size chess set, a putting green and a bocce ball court. Take it a step further with a complete bar, which can connect visually to the nearby kitchen zone, where function is at a maximum with every state-of-the-art stainless steel appliance that’s incorporated in standard indoor kitchens, plus a variety of extras: a hooded grill with a built-in fryer and smoker, a pizza oven, a rotisserie, a wine cooler, icemaker and wet bar, a cappuccino and espresso machine, and of course, ample storage space, work stations and countertops with stools for casual eating.

Adjacent to the kitchen would be a dining zone. For a cozy effect, cover it with a pergola and then hang a decadent chandelier over the table to set the mood at twilight. After a fine meal, meander over to the living room zone. If cool weather is a factor, think about including a heating system – which may range from traditional patio heaters to a built-in fireplace or radiant heat. This space in particular should offer ample ambient lighting, entertainment in the form of audio and/or visual equipment designed specifically for the outdoors and comfortable seating (upholstered in outdoor fabrics, of course), area rugs and accessories, but do keep in mind one rule of thumb, stipulates HGTV and STYLE Network expert Kelly Edwards: all of the exterior spaces must coordinate aesthetically with your interior décor, so that your home – inside and out– is cohesive and visually appealing.

It’s that time again for the Bi Monthly Recap…I’d just like to say that 2 weeks do not fly by in January like they do in the summer. We continue to suffer from very low inventory and I am sensing buyer fatigue in the homes priced under 1 million dollars, there are only so many times a person can be outbid on a home. The question is does that frustration lead to just a break or do buyers start looking in more affordable towns? The answer is both, at some point paying 900+ for a 3 bedroom 2 1/2 bath with just average kitchen and baths just seems ludicrous. For some buyers who already feel Newton is too suburban still believe it’s much more affordable here especially if you factor in school costs in the city.

There is still activity taking place this summer and I think more so than in previous summers. Labor Day is very early and school starts early, the Jewish holidays are late this year so I expect September to be very busy. There has been and uptick in the sale of homes priced over 1.5 million for the first time in a long while. Let’s hope that continues. Currently we have 137 homes on the market down from 144 two weeks ago. The lowest inventory is in the 800-899 range. 27 homes have gone under agreement and 12 have contingency agreements in the past 2 weeks. 11 of those are priced above 1.5 million. 32 homes sold with the busiest price point being 1 million to 1.5 million with 11 homes sold. The jumbo rate mortage and conforming are virtually the same which may explain the increase in over 1 million sales.

I would say this bodes well for the fall market…if you are thinking of selling call or email me at 617-921-6860 or margaretszerlip@gmail.com Enjoy the rest of your summer.